If you have ever seen me speak at one of the Money Shows, you will be familiar with this next graphic.  I use it all the time. 

My philosophy is that in technical analysis you are looking for patterns that repeat over and over again.  I use this graphic to show that we basically learned a lot about technical analysis in elementary school when the teacher asked us what shape comes next.

Hopefully, everyone answered that a circle comes next.  Otherwise we will have to address issues deeper than the stock market.

————— INTERNAL ENDORSEMENT ————–

Stock Market Shocker: How a Bunch of

5th Graders Made Fools of the Trading Elite…!

Wall Street wants you to believe that you have to entrust your money with the professionals and all their skills, resources and systems, if you want to make money in the markets. It’s what these guys do for a living! How could you possibly beat them?!

Nothing could be further from the truth. In fact, I have used an embarrassingly simple secret to make $15,048 in just 30 days… and boost my overall account balance 152% in less than a year.

Keep reading to learn how you
could join me each month…

—————————————————–

The reason I bring this up is that I am seeing a pattern in the S&P 500 that has caught my attention.  I was looking at the last two significant pullbacks in the S&P - the one in February/March and the one from last June/July.  In each instance, we saw the index break below the 100-day moving average, bounce back up into the 100-day and move lower to re-test the lows.

So right now it looks as if the S&P is headed back up to the 1495 area.  But when it does, you will want to take action and either close your short-term bullish plays or you may want to put on some short-term bearish plays.

If the S&P breaks and closes above the 100-day, you will want to take any bearish plays off as the pattern will have been broken.  One of the biggest mistakes traders make is leaving positions on after the drivers behind the trade have been broken.  When you do this, you blow your risk/reward relationships right out of the water.

Good luck and good trading,

Rick

P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.

NULL
NULL